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Introduction

Intel Corporation is the biggest semiconductor manufacturer in the world and has changed the
global marketplace radically since it was founded in 1968. The first handheld calculators and PCs (Personal
Computers) were developed through the innovation of Intel’s microprocessors. In the early 70’s increased
competition from Japanese semiconductor manufacturers had dramatically reduced the profitability of this
market this made Intel to shift the company's focus to microprocessors.

From the late 80s until the late 90s Intel had a 10-year period of unprecedented growth as the primary
hardware supplier to the PC industry, supplying microprocessor to IBM. Intel’s product
line of Pentium processors had become a household name. Today at least 80% of Intel’s processors are used
in PCs globally. Their product line consists of: chipsets, motherboards, flash memory used in wireless
communications, networking devices, laser printers, industrial machinery, and cellular phone base stations.

In June 1994, Intel engineers discovered a flaw in the P5 Pentium microprocessor. This resulted in a
$500 million loss in Intel's revenue. Ironically the media coverage regarding this flaw gave Intel
public awareness and for the first time consumers realized the importance of microprocessors. Intel
changed some of its business practices to be more end-user focused.

After 2000, growth in demand for high-end microprocessors slowed. AMD, Intel's largest competitor,
gained significant market share and Intel's dominant position in the market was greatly reduced.

In the early 90s antitrust allegations against Intel were made after AMD claimed that Intel was
monopolizing the market, but the lawsuit had no definite outcome. In 2004 and 2005, AMD filed another
lawsuit against Intel but with all this negative publicity caused Intel great profit loss, the company
announced a restructuring that resulted in 10 % workforce layoff which was around 10,500 employees.

Intel needed to regain the lost marketplace, with the launch of its new product development model
the Core micro-architecture Intel regained the market lead. This new processor was considered to be an
exceptional leap in processor performance.

Intel has become one of the world's most recognizable computer brands following its
long- running Intel Inside campaign. The campaign, which started in 1991, was created by Intel
marketing manager Dennis Carter. The Intel Inside advertising campaign sought public brand loyalty and
awareness of Intel processors in consumer computers.

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Intel brand logo
1968 - 2005 2005 - present

1991 - 2003 2003 - 2005 2006 - 2009 2009 - present

The original intel inside logo Lowered "e" in intel and The current intel logo
different face type with inside trademark

Intel replace the intel inside logo

to Leap ahead

In 2006 Intel announced that the Pentium name from their processors would no longer be used and in
2008, Intel planned to shift the emphasis of its Intel Inside campaign from traditional media such as
television and print to newer media such as the Internet. Intel marketing strategy became more focused on
online marketing.

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 SWOT Analysis of Intel

SWOT analysis is a commonly used technique through which managers form a quick overview
of a company’s strategic position. The technique is based on the assumption that an effective strategy
derives from the state between a company’s internal resources (strengths and weaknesses) and its
external situation (opportunities and threats). A good state maximizes a company’s strengths and
opportunities and minimizes its weaknesses and threats.

Intel has a strong market position in the semiconductors industry, which enhances its brand
image. However, intense competition in all its market segments could reduce the company’s market
share and profitability. The following SWOT analysis of Intel Corporation would indicate the state of Intel’s
strategic position in the industry.

Strengths
1. Intel is a globally recognized brand name and has strong brand loyalty from its consumers.
2. Intel was the pioneer in microprocessors for PCs and memory devices.
3. Intel is a global technology corporation and the world’s largest producer of semiconductor chip, based
on revenue.
4. Intel presently has around 80% of the microprocessor market share whereas AMD has roughly 17% of
the market.
5. Intel distinguished itself from a ‘commodity’ like position and established itself as the ‘brains’ of the
computer industry.

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Weaknesses
1. Intel has been accused of using divisive strategies in defense of its market position against its
competitors.
2. Intel had uses its market dominance to unfairly stifle competition
3. Since 2000, Intel could not maintain the position as the dominant supplier of microprocessor in
the industry.
4. By the end of the 2006, Intel restructured the company and resulted in the dismissal of 10,500
employees.
5. The company faced decreasing revenue in financial year 2008.
6. Retail prices are higher compared to competitors.

Opportunities
1. Product development and markets penetration in the existing markets is also a good opportunity.
2. Advancement in technology also provides the opportunity to offer new products.
3. Offering more diversification with their products in related and unrelated business such as:
security devices, broadband and cellular industry.
4. Backward and forward integration may reduce the cost, improve the quality and service.

Threats
1. Advancement in technology obsoletes the manufacturing facilities and products.
2. The strong price war is going on between PC producers.
3. Many competent PC makers are using inferior performance IC’S.
4. Changing customer taste and preferences along with the reduction in brand loyalty is a major threat.
5. Currency changeability in different countries create problem for the business of the company.
6. The company is facing strong competition to sustain its market share.
7. Intel Corporation is facing strong political instability, regulation and tariffs in different countries.
8. Product specialization of Intel can become a big threat. Having a limited product line Intel runs the risk
of being forced out of the market by a better product.
9. The fast development of cell phones and other mobile gadgets can perform the same tasks as PCs and
is having a major negative impact on the PCs market.

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 PESTEL and Five Forces Analysis of Intel

Strategic analysis is related to the structuring of the relationship between a business and its
environment. The business environment which is ever changing can offer both opportunities and threats
for the company.

P - POLITICAL It is essential for Intel to study and understand their business

E - ECONOMIC environment by using the PESTEL framework.

S - SOCIO-CULTURAL
Changes in these external forces affect the types of products produced,
T - TECHNOLOGY
the position of them, market strategies, types of services offered
E - ENVIRONMENT
and choice of business.
L - LEGAL

Political Forces
Intel is a multinational company and has to operate according to different policies set by government
of those countries. Any political instability can influence the economic growth of the country. Even though
third world countries can increase Intel’s profit the political instability prevents them from
conducting business effectively. The policies of some countries can hinder investment deals and might cause
valuable market share loss when trading licenses aren’t approved by bureaucrats.

Economic Forces
Economic trends can affect the industry; the economic factors are divided into the following
categories:

GNP trends

money supply

inflation rate

unemployment rate

Labor cost is the main reason for corporations to move their production plants to third world countries,
even in an unstable economy the production cost is so low that it can increase the profit
substantially compared to first world countries. For this reason Intel has invested millions in China and
Vietnam.

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Social Cultural
Social values like demographic factors such as population, age distribution, literacy levels, inter-state
migration, rural-urban mobility or cultural factors like social attitudes, customs, beliefs, rituals
influence business practices. Intel has invested heavily in China and Vietnam; both countries have a very
high literacy rate and a large workforce. The high unemployment rate for educated worker offers
Intel a cheap and reliable workforce.

Technology
Technological factors offer great opportunities but also threats and must be taken into account when
formulating strategies. Any technological breakthroughs can influence the company’s products,
services markets, suppliers, distributors, marketing practices and competitive position. It can also
open up new markets, change the relative position of an industry and render existing products and
services obsolete. Any technological changes can reduce cost barriers between businesses, create
shorter production runs, create shortages in technical skills and result in changing values and
expectations of customers and employees. This has major relevance to Intel as it can be the key survival
point. The wireless industry is the new digital trends of this era. This has huge profit potential for Intel and
for this reason they have shifted their focus to wireless devices such as mobile phones and electronic
gadgets.

Environment
With the focus on environment conservation major industries have the social responsibility to become
more environmentally friendly especially with their wastage and CO2 emissions generated by their
manufacturing plants. Intel’s goal is to reduce global computer CO2 emissions by 54 million tons per year,
equivalent to the annual output of 11 million cars.

Legal
The rules of competition, trade mark rights and patents, price controls and product quality laws have
become important as industries became more globalized. This has caused antitrust charges against Intel for
using anti-competitive methods to compete against its main rival AMD. This has affected Intel’s reputation
and Intel had to pay hefty penalties.

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Porter Five Forces
Porter’s five forces are based on the insight of corporate strategy that should bring the opportunities
and threats back to the organizations business environment. These forces determine the intensity of
competition, hence the profitability and attractiveness of a company. These include the following:

Porter Five Forces

1. The intensity of competitive rivalry

2. The bargaining power of buyers

3. The bargaining power of suppliers

4. The threat of the entry of new competitors

5. The threat of substitute products

1. The intensity of competitive rivalry

Rivalry is the fierce competition among companies in an industry to gain a greater market share.
In addition, customers’ demands have increased. Intel’s biggest rival is AMD and has been evenly matched
in product quality. Intel has tried different markets such as digital cameras but has come face to face
with industry giants that have a large percentage of the market. In order to compete in this market, Intel
has to invest heavily not only in R&D but marketing as well, a very risky and expensive move to make.

2. The bargaining power of buyers

A company needs to satisfy the customers in order to sell more products. If the price of the product is
too high compared to its substitute products then it won’t take long for the customers to switch. Moreover,
the quality has become more important to the customers than the price. Consumers had no
bargaining power in the past when Intel was the only producer of microprocessors but with the
increase in competition has given consumers a choice and a more competitive price.
3. The bargaining power of suppliers
The lower the bargaining power of a supplier the better it is for business. For Intel being in a
specialized market has always been affected by price fluctuations from suppliers but as the industry
has grown suppliers has lost the power to monopolize the market for materials in the industry.

4. The threat of the entry of new competitors

Some industries are harder to enter especially when a company has a trusted brand at a reasonable
price, if there is more than one rival in such an industry it makes it near impossible for new competition to
compete in the market. Intel faces no real threats from new emerging companies but only from existing
ones such as AMD.

5. Threat of substitute products

With a price increase consumers may switch to a substitute it may not offer the exact same features or
performance but it can placate consumer enough with the price. Sun Microsoft Systems would be a good
substitute for Intel and their consumer base has increased more with Intel’s price flux.
 Competitive Analysis of Intel - A Competitive Solution

Competitive analysis plays a vital role in a company, especially in the fast changing software industry.
Usually, gathering competitive intelligence isn’t done by only one department but in fact the
ultimate responsibility for competitive analysis may be found in different departments at different
companies. If your company doesn't have a good idea of the current and expected moves by the
competition, it risks losing sales and market share.

Understand the end to understand the means

Competitive analysis covers a huge range of information that could be gathered. Different types
of information are useful for different purposes. It's important to clearly define why you want information
on a competitor, so that you can determine what to look for.

Three major uses for competitive intelligence are:

1. to sell better against the competition
2. to determine how your product features compare to the market
3. to identify products and companies to purchase or be purchased by

Competitive analysis for sales

When gathering information for sales to use against your competition, focus on each
competitor's strengths and weaknesses this can relate to product features, scalability and
performance, financial stability of the company, the management team, the customer base, and
ability to deliver services. For every competitor, list each strength or weakness in order to determine to
act against their strengths or take advantage of their weaknesses.

Competitive analysis for feature leadership

A second common reason to analyze the competition is to determine how your product's
features compare to competing products. You do this in order to select and prioritize features to add to the
product so it will sell better against the competition.
Three levels of information
There are three levels of information gathered for competitive analysis: information, analysis,
and predictions.
1. Information is the straightforward gathering of corresponding facts for each competitor so that you can
make a simple comparison in annual sales, number of employees, product name, and strategic
partners.
2. Analysis takes the information gathered and provides comparison, conclusions, and recommendations.
For example, analysis will point out that a company is financially unstable and that your sales
reps should exploit this vulnerability.
3. Predictions look at the information and analysis and make educated guesses about a competitor's next
moves. Predictions are nothing more than educated guesses.

Predicting the next move

When you are able to predict probable business moves of a competitor, the company can take action,
or be ready to take action in order to reduce the risk of losing to competitors. A final piece of competitive
analysis may be to provide specific recommendations to counter predicted moves.

Pre-emptive strike
When your company faces potential moves by competitors which would be very harmful, it may be
worth a pre-emptive move of your own. This could involve acquiring a company or product that is
an acquisition candidate for the competitor. Or it may be simpler, such as a change to product
positioning, sales messages, or product capabilities to counter a move when (or if) it occurs.
 Choosing the best alternative

Intel’s New Strategy

Intel launched its new strategy based on identifying and creating new markets in 2006. The company’s
main focus use to be on microprocessors now Intel will play a key technological role in a range of fields
including consumer electronics, wireless communications and healthcare. The problem with simply being a
producer of processors is that other companies can move into your market. Once competitors
produce similar products the only way you can differentiate is by offering lower prices, which can be a
solution if the operation costs are optimal.

Intel’s new strategy is to create a variety of chips and software and then combine them together into
platforms. These platforms provide people and businesses with improved communications and computing
capabilities. It will also enable Intel to bring added value for consumers, win a larger share of
consumer spending and increase revenue. Its objective is to continually satisfy customer requirements by
producing a range of new and exciting products.

A key part of Intel’s more integrated platform strategy involves the development of
better technologies. These improve processor efficiency and allow computer users to take better advantage
of:

multi-tasking

security

reliability

manageability

wireless computing capabilities

Intel is an ‘ingredient brand’ that is part of the products that consumers purchase. Building key
relationships with important electronic companies such as Sony and Philips is an important strategy. The
objective is to provide the manufacturers of products such as laptops, mobile phones and personal
computers with integrated packages of chips and software.

The health industry is an untapped market and the industry has been slow in adopting IT applications.
However, health professionals have recognized the benefits of IT and more facilities have been integrating
technology into hospitals.
 The new strategy continues the emphasis on producing excellent products. However, there is now
a strong focus on marketing – finding out what customers want and then meeting their
requirements. Customers need to know what these new products can do for them. Clear
communication is therefore essential. The company has been restructured from top to bottom affecting
over 90,000 employees. The emphasis is on marketing and communicating with customers about what the
new technologies can do for them.
 Discussion questions

What have been the key success factors for Intel?

Management
Intel placed top priority on their people, and encouraged openness, fairness, and responsibility, Intel
was able to take full advantage of its workers.

Mistakes
The most talented and brightest people that were employed were given leverage when mistakes were
made so that they would be encouraged to develop breakthrough technologies.

Hard Work
Moore and Noyce refused to shy away from their inexperience and being willing to do what work they
needed. Also admitting their limitations, they were able to seek out qualified employees to help build the
company.

Competition
They learned that the key to entrepreneurial success was by being in a constant state of awareness
and fear of your competitors, entrepreneurs can become proactive instead of reactive, seizing new
opportunities as they present themselves instead of letting them pass them by.

Exclusivity
By specializing and focusing on a niche market, Intel was able to not only stand out from the crowd, but
to become market leader in the industry.
Where is Intel vulnerable? What should it watch out for?

Internet
As more consumers start going online via phones, tablets, e-readers and scaled- down laptops, Intel
Corporation’s is losing its position as the gateway to the Internet.

Product compatibility
ARM has always had an advantage over Intel as low-power architecture. ARM chips are smaller and
produce less heat which makes them ideal for tiny devices such as cell phones.

Monopoly
Intel will no longer have the monopoly on chips for PCs; Google announced that the new
Chrome operating system will run on computers with either x86-based or ARM-based chips.

Customers become competitors

Intel provides chips for Apples Mac computers but Apple is designing its own microprocessors for
future products which can affect Intel’s profit on a large scale.

Low cost commodities

Intel has a lot more profit to lose as it dives into the commodity fight for cell phones and
tries to defend its turf in PCs. The ARM-based chips are low cost commodities and can seriously undercut
Intel’s profit.

Security Threats
Security vulnerabilities in Microsoft Windows drivers and applications for its Centrino-based Intel
PRO/Wireless Network Connection hardware hold a great risk. Antivirus firms believe the possibility exists
that the flaws could cause malicious wireless virus attacks on consumers’ operating systems.
What recommendations would you make to senior marketing executives going
forward? What should the company be sure to do with its marketing?

Content and Promotional Strategy

Content strategy and content collaboration are growing challenges. In today’s Web-orientated world,
the number of marketing channels has exploded. Companies are faced with massive content
marketing requirements today. Intel should invest more into these channels especially blog posts, Face
book, Twitter and YouTube. If Intel uses a ‘per hit’ system where bloggers can get a percentage based on
web hits it could reach more people globally and far more important those blogs would be done in
that countries native language. Video advertising could have a greater impact and more people could
be reached through YouTube. Every aspect of the internet is a potential market for Intel.

Pricing strategy
If Intel reduces the price on chipsets it might face a profit loss but putting a massive mark up
on compatible upgrades may recoup the market share. Pricing seems to be the necessary measure, but
unsold inventory that is forced on to the market may flood the retail market and cause a further plunge in
prices. Reducing the price of Intel’s older generation products can boost sales dramatically.

Advertising strategy
Joint advertising with corporate giants like Microsoft, Oracle, EA Games could benefit Intel and giving
reimbursement on advertising done by companies using Intel products would motivate more exposure for
Intel.
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